The Multiple by Which the Commercial Banking System Can Expand

question 219

Multiple Choice

The multiple by which the commercial banking system can expand the supply of money is equal to

• A) the ratio of actual reserves to required reserves.
• B) the reciprocal of the federal funds rate.
• C) the reciprocal of the reserve ratio.
• D) the ratio of required reserves to actual reserves.

---

Definitions:

Homoscedasticity

A term in statistics describing a situation where all random variables across a dataset have the same finite variance.

Normality Of Errors

An assumption in many statistical models that the errors in the predictions are normally distributed.

Independence Of Errors

Pertains to a condition in statistical analyses where the errors of a model’s predictions are not correlated with each other.

First-Order Autocorrelation

The correlation between sequential observations in a time series, specifically between each observation and its immediate predecessor.